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Real gainers in Eid economy

August 12, 2013
- File Photo
- File Photo

The composition of the Eid economy changes marginally over time. So far, the food sector is believed to be the biggest gainer, chased by textiles, while all other products and services together constitute less than 15 per cent of the seasonal surge in sales.

Collectively, the formal and informal food sectors claimed close to half of the Rs700 billion worth of spurt in the market during this Ramazan.

An estimation of the share of broad categories of businesses, based on the opinion of businessmen and analysts, was attempted by this scribe. The random survey projected the food sector’s share at 45 per cent, and textiles’ at 40 per cent. About Rs100 billion (15 per cent of Rs700 billion) is shared between footwear, accessories, toiletries and toys in the product category, and tailoring, transport and grooming in services.

Within the food sector, the sweet merchants of a nation that loves mithai and tallan (sweets and fried), probably gained the most. Every year, businesses in this food sub-sector make special arrangements to match the hike in demand. During the current Ramazan, the sales were stated to have multiplied many times over their average monthly volume, though verifiable data was not made available to support the claim.

“Right from upscale brands like Sohni, Nirala, Anjarwala, and Rahmat-e-Shireen to neighbourhood shops, business was brisk all through Ramazan. The demand came from not only families and corporate clients throwing Iftar parties, but also from mosques. Sweets are distributed every time Quran is finished during the collective reading,” remarked Zubair Ahmed Malik, president of the Federation of Pakistan Chamber of Commerce and Industry.

“My company ordered 80 kg mithai, worth about Rs27,000, to be distributed in this one mosque located close by. Imagine the total number of mosques in the country, and the rest is simple maths. True, not every mosque will get the same quality and quantity, but there will hardly be any mosque in the country that does not celebrate the completion of Quran by sweet distribution,” remarked Ali Reza, an accountant.

“There can actually be more, but there must be a mosque for every 10,000 persons in Pakistan — a country of about 180 million people. The kinds of numbers that are thrown up at the end of an arithmetical exercise are astonishing,” he commented.

The sale of fruits, beverages and other edibles also increase significantly during the month. All companies and individuals associated with the sector got a boost. “From Nestles and Pepsis to Engros and K&Ns of the corporate sector, to gawalas and push cart fruit vendors, everyone gets a share of the enlarged pie,” said an expert.

The textile sector follows close on the heels of the food sector in terms of volume and margins. Market reports in the closing days of Ramazan from across the country confirmed record sales of garments.

“The business houses were expecting higher sales, but the spike in demand crossed their expectations. Many brands catering to the middle classes went out of stock close to Eid,” Farhan, a salesman at a gents’ wear shop at the Cooperative Market in Saddar, told this writer during a trip to the local markets.

The benefits of a booming Eid economy flow beyond borders. The availability of Indian jewellery, as well as Malaysian, Indonesian and Chinese garments and footwear, suggests that the manufacturing sector of neighbouring economies and Far East suppliers also cut a portion of the market pie.

“I do not have the numbers with me to substantiate the observation, but I believe that the penetration of Chinese items into the local market is so deep that variations in taste in this country must be dictating preferences of Chinese suppliers,” an analyst commented privately.

“While the quantum of gain varies with the scale and the level of sophistication of a business concern, there is no denying the fact that economic activity gets a boost in Ramazan, when even cautious spenders lower their guard and indulge in a shopping binge,” said a commentator.

The growth in the market, as well as competition and rising awareness among customers, is said to be forcing companies to innovate and improve the quality of their products.

“The level of brand loyalty is low in Pakistan. People switch easily, as a majority of buyers enter the market to make most out of their limited budgets. Businesses have to be mindful of changing consumer preferences to compete,” said a marketing expert.

The trend of online shopping among the young population is picking up slowly because of the limited choices available on the online marketplace. “It will take some more time for the trend to make its mark in Pakistan. To some extent, it also depends on the companies to start online sales,” said an analyst.

“I would have preferred to order online instead of taking the risk of venturing outside when the security situation is risky, but the market in Pakistan has yet to come online. For everything except for my pizzas and burgers, I have to venture out,” said Nida, a teenager, when reached for comments in a market.

Unfortunately, despite the depth and spread of the Eid economy, no credible study or literature is available to shed light on this massive activity. “Most of the economists work on projects sponsored directly or indirectly by the West. An attempt to understand the domestic economy to better comprehend the society to deal with its problems is lacking. The government has been found wanting, and the community of economists in the country also shares the blame for the lack of insight on situations and issues that should have provoked them,” said an analyst.